McDonald's Corporation

Date: June 9, 2019

To: Patrick Cole

From: Darren Chen

Subject: McDonald’s Corporation

Problem Statement:

During his tenure, Steve Easterbrook, CEO of McDonald’s Corporation, faces a series of tough challenges, including how to make breakthroughs from a growing number of competitors, to secure a new generation of customers and to overcome the issues on quality, operating costs, and operating expenses in fast-food industry. Most importantly, McDonald’s need to find its own clear course and position in new era of fast-food industry.

Purpose/ Objective:

Short term goals: To make a clear brand-repositioning decision.

Long term goals: To increase margins and market shares of McDonald’s, maintaining leading position in the industry.

Alternative Solutions:

Solution #1: Create new sub-brand specializing in fast-casual field.

▓ Pros: Different from McDonald’s and McCafé, a new sub-brand specializing in providing fast-casual food can not only provide healthier and high-quality food securing the main consumer segment, Millennials, but also can build up a new branding image. Also, McDonald’s can cede to provide a variety of items on menu, specializing at what it good, fast-food service, deducting unnecessary costs on inventory and equipment.

▓ Cons: This strategy could be time-consuming since people need time to get familiar with a new branding culture, and cost recovering could take time. Also, if the new sub-brand fails, the result will make the situation of McDonald’s worse.

Solution #2: Maintain a variety of product lines and pour more money into digital marketing, automatic ordering machine, automatic production line and IT order system to merger consuming behavior on-line and off-line, speeding up the service time and optimize the experience on consuming on-line.

▓  Pros: This approach can save more operating expenses from labor and improve conversion rate on-line which will benefit the revenue of McDonald’s.

▓  Cons: With decrease in the demand of human labor, this approach will expose McDonald’s into risk of CSR. Also, people will have no warm hospitality when consuming in the stores, leading side-effect on the consuming experience.

Solution 3# Transfer McDonald’s Corporation into a holding company.

▓ Pros: By transferring McDonald’s Corporation into a holding company, McDonald’s can implement the strategy of diversification without impacting the price of stock and the benefit of stakeholders fiercely.